The Prudential Regulation Authority (PRA) has published a consultation proposing targeted amendments to the UK Solvency II own funds framework, following the restatement of assimilated law into the PRA Rulebook. The package would remove a specific permission requirement for classifying equity-accounted subordinated instruments into own funds tiers, clarify supervisory expectations for refinancing capital instruments via concurrent tender offers and new issuances, correct drafting inconsistencies in existing Own Funds rules, and restate remaining relevant European Insurance and Occupational Pensions Authority (EIOPA) guidelines into PRA supervisory statements. On permissions and reporting, the PRA proposes to amend the lists of Tier 1, Tier 2 and Tier 3 “known” own funds items so that equity-accounted subordinated instruments can be tiered without a classification of own funds permission under section 138BA of the Financial Services and Markets Act 2000, while retaining the permission route for other non-listed items. Issuances of such instruments would move to the standard pre-issuance notification process, and reporting would be adjusted so equity- and liability-accounted subordinated instruments are reported together in row R0140 of template IR.23.01, with consequential terminology and validation changes across IR.02 and IR.23 instructions. For liability management, draft changes to Supervisory Statement SS3/15 would set out how existing requirements apply to concurrent tender offers and new issuances, including sequencing around pre-issuance notifications, prior permission for redemption, timing of derecognition, and the circumstances in which the PRA may indicate it is “minded to permit” redemption ahead of launch if the tender is capped at, and settled solely from, the proceeds of the new issuance. The consultation also proposes a set of minor Own Funds Rulebook corrections and consequential updates across the Rulebook and policy materials, and would restate remaining EIOPA guidelines on classification of own funds and ancillary own funds into SS2/15 and SS3/15, disapplying Classification of Own Funds Guideline 20 and removing related references from SS22/15 and SoP1/19. Responses are requested by 24 April 2026. The PRA intends to publish a dedicated policy statement in 2026 H2, with most changes taking effect immediately on publication of that statement, while the permission-removal and related reporting changes would be aligned with the implementation of changes proposed in CP22/25, to enable consequential reporting updates for year-end 2026 reporting.
Prudential Regulation Authority 2026-02-25
Prudential Regulation Authority launches consultation on UK Solvency II own funds fixes including removing permissions for equity-accounted subordinated instruments
The Prudential Regulation Authority has consulted on targeted amendments to the UK Solvency II own funds framework following restatement of assimilated law into the PRA Rulebook. Proposals include removing the specific permission requirement for classifying equity-accounted subordinated instruments, clarifying expectations for refinancing via concurrent tender offers and new issuances, correcting drafting inconsistencies, and restating relevant European Insurance and Occupational Pensions Authority guidelines into PRA supervisory statements.